What is Kava (KAVA)?
Kava's protocol makes it easier for users to borrow cryptocurrency. This makes it an important part of DeFi (Decentralized Finance). Despite the fact that there are many other lending protocols out there, the team behind Kava managed to develop the most unique solution possible. Below you can read about what Kava is, how it works and where you can best buy the KAVA cryptocurrency.
What is Kava (KAVA)?
Kava is a crypto protocol that is an important component for DeFi. This is because Kava allows people to borrow cryptocurrencies without the need for a central party, such as a bank. Everything happens on the blockchain, and is executed by the decentralized network of computers.
Many applications like Kava are built on the blockchain of Ethereum (ETH). In fact, this is one of the most important blockchains for DeFi. Kava, on the other hand, is built within the Cosmos (ATOM) ecosystem, because according to the team behind Kava, there are a lot more possibilities here.
A crypto protocol refers to a piece of software that can perform a specific function. In the case of Kava, that is a piece of software that can be used to borrow and lend cryptocurrencies, also known as lending in the crypto world.
What is the function of Kava?
Users can borrow cryptocurrencies and then use them for other purposes. To do this, users must first hold collateral in the form of cryptocurrency in a smart contract running on Cosmos. This way, the platform knows for sure that a user can pay back their debt.
You may be asking yourself what is the point of borrowing money when you have to hold the same amount in a smart contract before you can borrow.
Suppose someone owns crypto currency A, but is also interested in crypto currency B because this person sees potential in it. However, he has no money left to buy crypto currency B, and prefers not to sell crypto currency A because he expects it to still increase in value.
The user then secures crypto currency A in a smart contract, after which he receives crypto currency B. The moment crypto currency B has increased in value, he can pay off his debt after which he is in possession of crypto currency A and the remaining remainder of crypto currency B (the profit).
By whom was Kava founded?
Kava Labs Inc is the company behind Kava and consists of several employees. Brian Kerr is the CEO of Kava, and is supported by the following people:
Scott Stuart - Product Manager;
Ruaridh O'Donnell - Blockchain Development Lead;
Kevin Davis - Lead Engineer;
Stan Press - Head of Marketing;
Aaron Choi - Head of Business Development Asia.
In addition, Kava gets help from a number of advisors, including Robert Leshner (CEO Compound) and Sunny Aggarwal (Scientist Cosmos).
How does Kava work?
Kava runs as a blockchain within the Cosmos ecosystem. This means that it can use Cosmos' framework (pre-programmed base), but can still develop its own blockchain.
Kava's network works according to the Proof of Stake consensus mechanism, which means that validators provide validation of transactions.
Users who want to borrow cryptocurrency will first need to deploy crypto coins on Kava's platform. There are several cryptocurrencies supported by Kava, including Ripple (XRP), Bitcoin (BTC) and Binance Coin (BNB). Next, they receive cryptocurrency in the form of USDX. This is the stablecoin of the Kava network.
USDX is minted the moment users decide to borrow crypto by holding other crypto coins in the smart contract. For this, they then also receive a reward in the form of KAVA. The amount of KAVA they can earn depends on the crypto coins they bet and the amount of USDX they mint.
The coins that are tied up in the smart contract serve as collateral for the USDX stablecoin. In this way, therefore, USDX can always be securely linked to the US dollar. The condition is of course that the collateral is larger than the market cap of USDX. Kava uses a special protocol to guarantee this.
The KAVA cryptocurrency
KAVA is the cryptocurrency of the Kava protocol. The token is used for several functions:
Governance - Owners of KAVA can have a say in the choices that are made and thus contribute to the further development of Kava;
Staking - By staking KAVA you contribute to the liquidity of the protocol and receive interest;
Reward - Borrowing USDX can earn you money in the form of KAVA;
Transaction fees - Transactions you make are not free, and you therefore pay transaction fees in the form of KAVA.
Where can you buy KAVA?
KAVA can be purchased on the Coinmerce crypto exchange. For this you will need to be in possession of an account at Coinmerce. Don't you have one yet? Then you can easily and quickly create an account here
When you have an account you can buy KAVA with iDeal, SEPA, Mybank, Giropay and Bancontact. It is also possible to buy KAVA with Coinmerce Coins (the stablecoin of Coinmerce). For this you will first have to deposit money on the Coinmerce exchange. You will not pay a deposit fee for this.
Storing KAVA in your crypto wallet
Are you buying KAVA from Coinmerce? Then the cryptocurrency will be moved directly to your Coinmerce wallet. Here you can keep KAVA safe, because we keep a large part of the cryptocurrencies in cold storage. Of course, it is also possible to move KAVA to your hardware wallet. For this you pay transaction fees determined by the Kava network.
Can I stake KAVA and where to do it?
It is possible to stake KAVA. You can start staking KAVA at Coinmerce. To do this, you need to be in possession of a minimum of €10 in KAVA, after which you can start staking tokens directly from your wallet. By staking KAVA you contribute to the security of the network and can expect an annual return of 10%.
Kava is a protocol that runs as a blockchain within the Cosmos ecosystem. This protocol allows users to borrow cryptocurrency, in the form of USDX. To do so, they will need to put up another cryptocurrency as collateral. Then USDX coins will be minted, after which they will receive a reward in the form of KAVA for minting these coins.
You can buy KAVA on the Coinmerce exchange. When you buy KAVA here, it is stored in your Coinmerce wallet. From the wallet, you can stake KAVA and expect a 10% annual return.